S. Korea's household credit hits record high in Q4

By 정주원
  • Published : Feb 25, 2014 - 13:22
  • Updated : Feb 25, 2014 - 13:34
South Korea's household credit rose to a fresh high in the fourth quarter, with its growth accelerating from three months earlier on a sharp rise in mortgage lending, the central bank said Tuesday.

Household credit totaled 1,021 trillion won ($954 billion) as of end-December, up 27.7 trillion won from three months earlier, according to the Bank of Korea.

Household credit refers to credit purchases and loans for households that have been extended by financial institutions, including commercial lenders and mutual savings banks.

The fourth-quarter gain compares with a 14 trillion won on-quarter rise posted in the previous quarter. Overall, household credit increased 57.5 trillion won last year, the central bank said.

The BOK said the household debt growth accelerated during the fourth quarter as mortgage lending sharply increased ahead of the end of the government's tax breaks on home purchases.

In April, the government unveiled a set of measures to boost the slumping property market, including tax breaks for first-time homeowners. A temporary tax benefit came to an end in December.

Local banks' home lending grew 8.4 trillion won on-quarter to 481 trillion won in the last quarter of 2013, compared with a 2.1 trillion won on-quarter gain in the July-September period.

Their mortgage lending increased 6.7 trillion won during the October-December period to reach 328.9 trillion won at the end of last year.

Credit purchases stood at 58.3 trillion won as of end-December, up 3.7 trillion won from three months earlier, it added.

Korea's household debt has been repeatedly cited as the main drag on Asia's fourth-largest economy as households' high indebtedness is feared to curb domestic demand and thus crimp economic growth. (Yonhap)